UK bows to EC rule on contract delay period

Contractors face delays in signing public sector contracts now that the UK government has bowed to European Commission (EC) pressure and introduced a mandatory standstill period between contract award and sign-off, allowing losing bidders the opportunity to contest the award.

The Treasury came under pressure to make the changes after the EC threatened to take the UK to the European Court of Justice earlier this year for not having procedures in place for tenderers to contest the award of a contract under the remedies directive.

The EC closed this loophole following the 2001 Alcatel case in Austria, which saw aggrieved tenderers for an electronics contract go through a lengthy court case because they couldn’t contest the award.

In response, the Office of Government Commerce (OGC) has now issued interim guidance to all UK contracting authorities stating that they must allow a minimum 10-day standstill period to allow any party to contest the contract award.

No maximum standstill period has been prescribed, although the OGC expects the period to last no more than 20 days.

However, that period could stretch into months as the floodgates open up for legal challenges from aggrieved bidders and those that might want to cause mischief.

Authorities are also expected to send detailed information to the losing bidders, including the identity of the winning tenderer and its score, the score of the addressed losing bidder and the award criteria.

If a challenge is made within two days of receiving the information, the contracting authority must stop proceedings until a resolution has been made.

In extreme cases an awarding authority can call for a quick legal resolution. The OGC played down the threat to contract delays by stating that the new approach gives greater "transparency" during the tender process.

"We are likely to see an increase in legal challenges, but the greater transparency can only be a good thing to root out any malpractice," said Stephane Reynolds, the OGC’s EC projects consultant.

"In the past, contracts went straight from award to signature. By having this transparency, we will be ensuring that we are getting value for money and that the selected tenderer is the right one for the job, not a friend of one of the bid team."